Business services providers use their specialized expertise to help enterprises streamline operations and cut costs. These firms have helped their customers unlock huge efficiencies, so it’s no surprise the industry has posted a 16% gain over the past six months, beating the S&P 500 by 7.7 percentage points.
Regardless of these results, investors must exercise caution as many companies in this space are sensitive to the ebbs and flows of the broader economy. On that note, here is one resilient services stock at the top of our wish list and two we’re swiping left on.
Two Business Services Stocks to Sell:
CDW (CDW)
Market Cap: $18.45 billion
Serving as a crucial bridge between technology manufacturers and end users since 1984, CDW (NASDAQ: CDW) is a multi-brand provider of information technology solutions that helps businesses and public sector organizations select, implement, and manage hardware, software, and IT services.
Why Does CDW Worry Us?
- Annual sales growth of 3.9% over the last five years lagged behind its business services peers as its large revenue base made it difficult to generate incremental demand
- Projected sales growth of 3% for the next 12 months suggests sluggish demand
- Performance over the past two years shows its incremental sales were less profitable, as its 2% annual earnings per share growth trailed its revenue gains
At $143.61 per share, CDW trades at 12.9x forward P/E. Read our free research report to see why you should think twice about including CDW in your portfolio.
Equifax (EFX)
Market Cap: $19.82 billion
Holding detailed financial records on over 800 million consumers worldwide and dating back to 1899, Equifax (NYSE: EFX) is a global data analytics company that collects, analyzes, and sells consumer and business credit information to lenders, employers, and other businesses.
Why Is EFX Not Exciting?
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 3.9 percentage points
- Earnings growth over the last five years fell short of the peer group average as its EPS only increased by 1.4% annually
- Unchanged returns on capital make it difficult for the company’s valuation multiple to re-rate
Equifax’s stock price of $166.47 implies a valuation ratio of 18.7x forward P/E. Check out our free in-depth research report to learn more about why EFX doesn’t pass our bar.
One Business Services Stock to Watch:
Tetra Tech (TTEK)
Market Cap: $8.04 billion
With a 50-year legacy of "Leading with Science" and operations on all seven continents, Tetra Tech (NASDAQ: TTEK) provides high-end consulting and engineering services focused on water management, environmental solutions, and sustainable infrastructure for government and commercial clients worldwide.
Why Are We Positive on TTEK?
- Market share has increased this cycle as its 13.3% annual revenue growth over the last five years was exceptional
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Free cash flow margin jumped by 3.6 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Tetra Tech is trading at $30.94 per share, or 19.2x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
